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Reddit’s dream: I’ll trade you all of these page views for all of your money

Last week, I wrote about popular user-generated news site Reddit,
which, despite being owned by Conde Nast, finds itself having money
problems.

To solve them, at least temporarily, it asked for donations. And it got
plenty of them — approximately 6,000. Calling the fundraising campaign a “triumph,” a member
of Reddit’s team also wrote, “It’s given everyone involved with reddit
a good kick in the pants right when we needed it.“

A few days later, Reddit was back with another blog post hinting that the company is really starting to look at its business model. One of the things it has discovered: “‘experts’ misunderestimate our traffic, and we don’t know why.“

According to Reddit:

More than 8,000,000 unique visitors in the last 30 days and 400,000,000 page views. This is a typical month for us. In fact, our numbers would have been even higher if not for some site issues at the end of June.

The problem is, advertisers generally don’t trust Google Analytics numbers. They have their own preferred sources of traffic information that they put their faith in. Let’s take a look at some of them.

Reddit points out that the traffic numbers for Reddit on Compete.com, Quantcast, Alexa and Nielsen are much lower than its own internal numbers. Of course, Compete.com, Quantcast and Alexa really aren’t relied upon by the largest advertisers and agencies; comScore (which isn’t even mentioned) and Nielsen are. And when it comes to how they operate, and how advertisers use them, the Reddit team is in the dark:

There’s not a lot of information out there about how these places come up with their guesses, or how an underrepresented site can get them to report more realistic information. Give them a kickback? Send them a fax? Public shaming? Some kind of technical solution?

This comment caught my attention because there is quite a bit of information about how various analytics services come up with their data, and how publishers can often work with them to improve the accuracy of their numbers.

The fact that Reddit’s team doesn’t know about this, and apparently didn’t even bother to do a Google search, speaks volumes. Even more revealing: the Reddit team’s apparent notion that higher traffic numbers are significantly going to help it sell advertising, as if publishers can go to advertisers and easily exchange a massive number of page views for a massive amount of money (“I’ll trade you all of these page views for all of your money…“). It doesn’t work like that, of course. Even the largest of publishers and networks have to hustle to move their inventory, and that will certainly be the case for a user-generated content site like Reddit.

I don’t mean to pick on Reddit, but the public discussion about its business is something we don’t often see publishers engaging in, so Reddit provides an interesting case study of sorts.

What it highlights: if you’re an online publisher, you need business leadership. The Reddit blog posts reveal that there’s a reason for Reddit’s financial woes: the company clearly doesn’t have anybody taking care of business. That’s particularly interesting given that Reddit is owned by Conde Nast. While it’s understandable that Conde Nast doesn’t want to pour more money into Reddit, the fact that Conde isn’t providing any business insight shows a real lack of wisdom on Conde Nast’s part.

So what should Reddit do?

Reddit should consider that it doesn’t need more engineers right now. It should instead consider using the money its users donated to bring on somebody who understands the business of online publishing, and a good ad sales person. And Conde Nast, which is of course a major offline and online publisher, should probably find a way to divest Reddit if it’s not willing to make sure that the people running the site have some basic knowledge of how online publishing works as a business.

The lesson here for other ad-supported online publishers is clear: it’s okay to be engineering-heavy, but if you don’t have somebody on your team that understands how advertisers buy and sell media online, you’ll eventually wish you did.

Overabundant inventory is a growing issue online. And there are more than a few advertisers and publishers who would like someone to blame for their ever sinking ad prices. But trying to blame Facebook isn’t a good idea. Facebook ads may cost a lot less than other online inventory, but they work. Moreover, publishers don’t need to worry about Facebook’s prices. Unless they’re not delivering the kinds of returns that Facebook gets for those rates.

A friend of mine who is a marketer once remarked that multichannel marketing is a lot like sex: just about everybody wants to
do it, but until you really know what you’re doing, it can be a bit of
a disappointment once it happens.

One of the most disappointing things about multichannel marketing
campaigns is that, in retrospect, they turn out to be meaningless
exercises. A lot of excitement gives way to confusion and the reality
that what you expected isn’t what you got. And that’s assuming you
expected something in the first place.

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